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GM deal promises new vehicle for Oshawa plant

There had been fears the Oshawa facility might shut down in 2019, but Unifor president Jerry Dias said the contract ensures GM’s commitment worth hundreds of millions of dollars.

The GM facility in Oshawa will stay open, and will be the “first and only plant in North America that will have the ability to build both cars and trucks,” says Unifor president Jerry Diaz. (Vince Talotta / Toronto Star) | Order this photo

Autoworkers at General Motors are breathing a sigh of a relief that the company has made new product commitments for Oshawa and St. Catharines, hoping it begins the turnaround for the Canadian auto industry.

As part of the deal reached late Monday between the automaker and Unifor, GM is also reversing a trend where automakers have been moving manufacturing to Mexico and the southern U.S. to cut costs. Monday’s deal includes a promise to move some engine production from Mexico to St. Catharines.

“We can really say that the tide is changing,” said Jerry Dias, Unifor’s national president, in an interview Tuesday. “I think it’s fair to say we have hit home runs all over the place.”

The union said it won wage increases for workers, a higher start rate for new hires and a signing bonus. Ratification votes for almost 4,000 workers are scheduled for Sunday.

“We have locked in the vehicles in the collective agreement. They are not going anywhere,” said Dias, who vowed not to make mistakes of the past, where they signed deals and then GM later closed the truck assembly plant in Oshawa and moved Camaro production to Michigan.

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The tentative deal, reached just before the Monday midnight deadline, ensures a new vehicle for the flex line at the Oshawa assembly plant, which had no commitment beyond 2019. It currently builds the Buick Regal, Chevy Impala and Cadillac XTS.

However, the consolidated line, which builds the Chevy Equinox as overflow production from GM’s busy CAMI plant in Ingersoll, will close.

Dias said even though the consolidated line will wind up, he said there will be more guaranteed jobs at GM, including making 700 temporary workers permanent under the deal

He would not disclose the total investment promised by GM – though Bloomberg, citing sources, said it was $400 million in Oshawa and $120 million in St. Catharines.

Dias would not say what vehicle will be built in Oshawa, though he noted the investment will make Oshawa “the only plant in North America that has the capabilities of building both cars and trucks,” which suggests it could be a truck.

And given that truck sales are on the rise, it could be an important lifeline for Oshawa. “I expect we could build anything that General Motors makes,” he said.

Dias also boasted that basic V6 engine production will be coming from Mexico to the St. Catharines plant. “It makes sense to consolidate those engines in one facility,” he said.

General Motors issued a statement shortly after the deal was announced, saying the agreement will enable significant new product, technology and process investments at GM’s Oshawa, St. Catharines and Woodstock facilities.

GM added that the company will be working with government “on potential support,” and will provide details on the investment at the appropriate time.

However, the biggest concession that Unifor made was agreeing to move all new hires at GM to a defined contribution pension plan, instead of a hybrid plan that included some defined benefit elements.

Since that hybrid pension plan was struck in 2012, General Motors has not hired a single new worker in Canada, though that will likely like change with the new pension in place, especially in facilities like St. Catharines where 97 per cent of employees are eligible for retirement.

“The only GM employees worldwide that still had a defined benefit plan was us in Canada,” Dias said. “When you’re the last survivor, it puts added pressure on you.

“Ultimately, we weren’t going to gamble (on that),” he said. “There was no question they were planning on closing Oshawa.”

That new defined contribution pension setup will certainly come up during talks with Ford and Fiat Chrysler, which have both hired in recent years under the hybrid plan.

Under pattern bargaining, Unifor negotiates with one automaker in hopes of setting a template that will be applied at the other two companies. Unifor is expected to name its next target for contract talks later this week.

Dias said while the pension for new hires will be an issue, he insisted companies may have their own preferences.

“It’s all about costs,” he said. “The defined contribution plan we have put in place at GM is very expensive. You may find some employers would prefer the hybrid plan, because if interest rates go up, their overall costs will be much less.”

Tony Faria, director of the Office of Automotive and Vehicle Research at the University of Windsor, believes Unifor comes out a winner with this contract.

“I think they did very well,” he said, referring to wage hikes and lump sum payments as well as investment commitments.

Faria believes the hybrid pension for new hires was always going to be eliminated at GM, after the union agreed to such a change at the CAMI assembly plant in 2013.

He added that the move to shift engine production from Mexico to Canada is significant, though it does not signal the immediate turnaround of auto manufacturing in Ontario.

“We have got to start winning once in a while in that regard. It is positive, for sure,” Faria said, adding automakers like to keep engine production close to assembly lines.

There’s no guarantee the engines in St. Catharines will be used in Oshawa, though there’s a good chance, he said.

“Engines are a big bulky heavy item to ship. You would like to ship them minimal distances,” Faria added.

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